06.04.09

SCHUMER, TONKO CALL ON SEC OF AG TO REVIEW WEST VIRGINIA DECISION ON WIC CONTRACT; BEECH-NUT SUBMITTED WINNING BID BEFORE BID PROCESS WAS ABRUPTLY CANCELLED

Beech-Nut Submitted Lowest Bid For "Women, Infant, Children" Program, But Bids From All Companies Were Disqualified For Technical Reasons And Process Started Over Following A Rival Company's ComplaintSchumer, Tonko Call On Secretary Of Agriculture To Consider Allowing Small Technical Corrections To Be Made To Existing Bids; Beech-Nut Can Receive ContractBeech-Nut Offered Lowest Bid; Awarding Contract Will Save Government Money And Create Jobs In New York

United States Senator Charles E. Schumer and Congressman Paul Tonko today called on Secretary of the United States Department of Agriculture (USDA) Tom Vilsack to review a decision made by the government of West Virginia to cancel all bids for a competitive contract for the State of West Virginia's Women, Infants and Children (WIC) program. Three bids had been submitted to West Virginia for the contract, and BeechNut Nutrition Corporation's bid was revealed to be the most competitive.  After the bids were made public, Gerber Products Company, which had also submitted a bid, sent a letter to the West Virginia Purchasing Division, asking all of the bids be disqualified.  The State of West Virginia disqualified all three WIC program bidders, citing technical issues, and announced that new bids would be sought.  Today, in a personal letter, Schumer and Tonko wrote to the head of the USDA, the federal agency that oversees the WIC program, and asked that the companies be allowed to correct the technical problems without submitting new bids. 

 

Schumer and Tonko noted that being able to correct the missing information in the bids, without allowing the companies to resubmit them, is critical because Gerber now knows BeechNut's winning bid, creating an unfair advantage.  This would lead to a situation where BeechNut could lose the contract after having already submitting the lowest bid.  

 

"BeechNut won this contract fair and square by offering the most competitive bid," said Senator Schumer.  "Disqualifying all bidders at the last minute for insubstantial technical reasons at the behest of a competitor will not only hurt BeechNut, but undermines the entire bidding process that is critical to reducing the government's cost and maximizing the reach of this critical program."

 

"We need a common sense solution that will restore fairness to this process for everyone involved," said Rep. Paul Tonko (DNY 21). Forcing the companies to submit new bids puts Beech Nut at a competitive disadvantage over minor technical issues which could otherwise be resolved on a manner that will ensure the best outcome."

 

After a request for quotation (RFQ) was issued by West Virginia's WIC program, Beechnut submitted the most competitive bid.  BeechNut's bid, along with the bids for all other competing parties, were disqualified at Gerber's request.  The bids were disqualified because all three companies failed to include a factor called the "highest wholesale cost" - which is a ceiling on the amount stores will pay for the product.  This factor does not affect the ultimate price the government pays for the baby food, but is used to make it easier to compare the bids. The three companies could correct the omission without changing the bids themselves.  Had the bids not been disqualified, BeechNut would have been awarded the contract. 

 

Schumer has long been instrumental in BeechNut's success in upstate New York. In the summer of 2007 Schumer pressured USDA to assign an additional food inspector to BeechNut to allow the company to operate more efficiently.  In the summer of 2006, Schumer worked with the Empire State Development Corporation and the U.S. Small Business Administration (SBA) to construct an incentives package to save BeechNut's Canajoharie plant after it suffered severe flood damage. In February 2000, H.J. Heinz, Inc. and BeechNut's then parent company, Minot Holding Corporation, announced a planned merger which threatened operations at both the Canajoharie and Fort Plain production plants. Schumer intervened with the Federal Trade Commission (FTC) and asked it to delay approving the merger until Heinz completed its review of the local plants. One week later, the FTC began its ultimately successful effort to block the merger. In the winter of 2002, Schumer also helped launch a new product line, called First Advantage, at the Canajoharie Plant. 

 

The Special Supplemental Nutrition Program for Women, Infants, and Children better known as the WIC Program serves to safeguard the health of lowincome women, infants, & children up to age 5 who are at nutritional risk by providing nutritious foods to supplement diets, information on healthy eating, and referrals to health care.  It is a Federal grant program administered through all 50 states, with approximately 46,000 authorized retailers nationwide.  Over 500,000 people participate in the program in New York State, and over 50,000 participate in West Virginia.

 

Today Schumer and Tonko wrote to the Secretary of Agriculture Tom Vilsack and urged him to allow all three companies competing for the West Virginia WIC contract to make technical corrections, without changing the bids themselves. 

 

 

The Honorable Tom Vilsack

Secretary

Department of Agriculture

14th and Independence, SW

Washington, D.C. 20250

 

Dear Mr. Secretary:                

 

 

We write to request that the United States Department of Agriculture (USDA) investigate a situation that has arisen over a competitive contract for the Women, Infants, and Children (WIC) program in West Virginia.  It is our understanding that the State of West Virginia will establish a rebate for infant foods provided to the State's WIC program.  Furthermore, West Virginia's contact will set the guidelines for the Mid Atlantic Consortium of States which includes: New Jersey, Delaware, Maryland, Pennsylvania, Virginia, District of Columbia, Puerto Rico and the US Virgin Islands.

 

The State of West Virginia recently published a Request for Quotation (RFQ) to provide a rebate for jarred baby food. Beech Nut Nutrition, which is located in New York State, responded to the RFQ along with two other competitors.  The competitive bids were opened and Beech Nut had bid the highest rebate.  Subsequent to the opening of the bids, and the results made public, Gerber Products Company, which had also bid, sent a letter to the West Virginia Purchasing Division suggesting that Beech Nut's bid be disqualified.

 

The State of West Virginia disqualified the three WIC program bidders citing technical issues, and announced that new bids would be sought.  We believe that this is inherently unfair and would do enormous harm to Beech Nut, as their competitors now know what their winning bid was and can adjust accordingly.   If technical deficiencies were, in fact, present in the original RFQ, we ask that the bidders be allowed to correct those deficiencies without undermining the fair competitive bidding process.

 

WIC is an important program to ensuring the nutritional health of lowincome women and their children, and we know you share our commitment to expeditiously and efficiently administering the program. We would appreciate your review of the West Virginia action to make sure it complies with USDA regulations.   We note that 7 CFR 3016 specifically requires that procurements be conducted in a full and open competition, and prohibits "Any arbitrary action in the procurement process."  

 

Thank you for your attention to this important matter.  If you have any questions, or need further information, please contact Steve Mann in Senator Schumer's Albany, NY office or Sean Shortell in Congressman Tonko's office.

 

Sincerely,

 

 

 

Charles Schumer

United States Senator

 

 

 

Paul Tonko

United States Representative



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